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Sean D. Reyes
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AGO Files Charges in $200 Million Alleged Affinity Fraud Scheme

Utah Attorney General’s Office Files 16 Second Degree Felony Counts in

Father and Son $200 Million Alleged Affinity Fraud Scheme

SALT LAKE CITY –The Utah Attorney General’s Office filed 15 second degree felony counts of Securities Fraud and one second degree felony count of Pattern of Unlawful Activity on a father and son for allegedly engaging in fraud in Fountain Green since 2008. Investigated by the Federal Bureau of Investigation (FBI), Securities & Exchange Commission (SEC) and agents with the Internal Revenue Service (IRS), the case was filed in Utah’s Third District Court.

“We sincerely appreciate the lengthy and difficult investigation by our partners at the FBI, SEC and IRS in this case. We are pleased that they trust our office to prosecute such an important matter that potentially impacts so many alleged victims.  If proven, this case is sadly the perfect warning to the trusting people of Utah,” said AG Reyes, “I personally also want to thank Assistant Attorney General Jake Taylor for his work on this case, prosecutorial expertise and desire to put an end to white collar crime in our communities.”

“This particular case of alleged affinity fraud is devastating if proven to be true. Anytime a neighbor, friend, associate, or even family member makes a pitch for funding, it is critical to research the business or opportunity,” warned Attorney General Reyes. “Our office prosecutes too many fraudsters who have taken funds from innocent people who trust them due to personal relationships. To deter this alleged type of crime, we currently have a team working to launch the nation’s first White Collar Crime Registry in the coming months.”

The Affidavit of Probable Cause filed by the Attorney General’s Office claims that Wendell A. Jacobson and his son Allen R. Jacobson allegedly engaged in fraud through a complex web of over 200 corporate entities.  The Jacobsons raised more than $200 million from over 400 investors – offering the opportunity to invest in limited liability companies (LLCs) that directly or indirectly owned large, multi-unit apartment communities in no fewer than eight states. The Jacobsons are accused of representing to investors that they would buy apartment complexes at significantly discounted prices with low occupancy rates, renovate them, improve management and sell them within five years. The Jacobsons told investors that Wendell Jacobson or one of his wholly-owned entities always owned and had contributed at least 50 percent of the funding for each LLC – and that investor returns would be derived from the apartment complex in which they invested. An investigation by the FBI, SEC and IRS alleges these and other representations to investors to be false.

The multi-agency investigation also revealed the Jacobsons allegedly engaged in numerous other deceptions while trying to obtain investor funds. Wendell Jacobson is accused of telling investors that he never lost money on a property when in fact, Investor LLCs experienced significant net losses.  Also, on numerous occasions, investors were allegedly told that properties they owned were sold at a profit, when they were not. In one example, Wendell and Allen Jacobson allegedly announced the fictitious sale of a property for $15 million and represented to investors a gain of 20.7 percent.

The charges contained in the Criminal Information and Affidavit of Probable Cause are merely allegations, and the defendants are presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.

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